Skip to content

SRD may have to take out loan to pay bills

The Strathcona Regional District may have to borrow money in order to pay some of its bills.

While the dollars required to meet its obligations does exist in the budget, the regional district won’t actually be in receipt of those funds until August.

At its board meeting last week, regional district directors approved a revenue anticipation borrowing authorization bylaw for up to $5 million.

Dave Leitch, the regional district’s chief administrative officer, said the move allows the corporation to borrow the money, either through a line of credit or a short-term loan, in order to pay bills that come in before the regional district receives its tax revenue on Aug. 1.

“Current cash flow projections suggest that the regional district will have a shortfall in the range of $1.5 to $2 million prior to receiving property tax requisition payments on August 1, 2016,” Leitch said. “In order to meet its financial obligations as they become due, the regional district can make short-term overdraft arrangements within our current banking agreement or through the Municipal Finance Authority’s short-term financing program.”

The short-term borrowing rate with the Municipal Finance Authority is currently 1.4 per cent per year.

Dawn Christenson, the regional district’s finance manager, said that without the borrowing bylaw, the district’s general fund account would likely be overdrawn by around $1.6 million by Aug. 1.

Having said that, there’s no guarantee the regional district will follow through with borrowing the money. The board has given the green light to short-term loans in each of the last five years but the regional district has not had to use one.

Christenson said this year, however, there is a real possibility the regional district will have to borrow as unrestricted surplus funds are being depleted. The regional district is expecting to bring in revenue of $18.7 million this year, including $10 million in property taxes.